No evidence that tobacco control increased illicit trade in Latin America

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06 Mar 2014

The most common argument against raising tobacco taxes – a measure widely recognised as effective at curbing tobacco use – has been that this will increase trade in illicit tobacco. Unfortunately, there is scarce, trusty data on this topic.

Most of the information used by media and governments is provided by the tobacco industry or companies, such as as Euromonitor and Synovate, which present the illicit tobacco trade as a percentage of the total tobacco market. As a rule, tobacco control advocates reject this data, because it is aimed at the business sector and has no clear sources.

Analysis of 13 countries

Acknowledging that we are uncertain how Euromonitor produces its estimates, we analysed absolute figures provided by the company for the legal and illegal tobacco trade in 13 LA countries (11 had ratified the WHO Framework Convention on Tobacco Control and 2 had not). We focused on the years after the FCTC came into force in 2005.

Our analysis revealed that illegal tobacco products, as a percentage of the total market, averaged for all countries: 20.9 percent in 2000-2004, 18.52 percent in 2005-8 and 18.9 percent in 2009-12. As Figure 1 shows, the absolute numbers of illegal cigarette sticks were, for all countries, 66,426 (2000-4); 56,644 (2005-8) and 52,533 (2009-2012) (figures in millions of sticks).

Figure 1

Comparing the pre-FCTC period, with the period 2009-12 (when the treaty was in force in most of the countries), we found a 21 percent decrease in the number of sticks of illegal tobacco products, and a 2 percent decrease when considering the total tobacco market. In other words: a 10 percent decrease in illicit tobacco between the pre and post-FCTC periods.

Of course, this analysis could hide the reality in individual countries, so we decided to examine the situation in one of them, Uruguay, as an example. Media articles there have claimed that illicit trade peaked when the FCTC’s tobacco control measures were implemented after 2005.

Figure 2

Our findings? If we consider percentage change in the use of illegal products, there was a significant increase – from 14.2 percent in 2006 to 19 percent in 2012. But absolute figures remained quite stable: 539 million sticks (2006) to 543 million (2012). The main development was that consumption of legal tobacco products, and total tobacco consumption, declined significantly after 2005.

To summarize: Euromonitor data provides no evidence that implementing the tobacco control measures in the FCTC increased the consumption of illegal tobacco products in the 13 LA countries we analysed, when considered as a unit.